Selling Stuff

Paul Darcey

@pauldarcey #ullconf

Making Money With Apps

© 2014 Paul Darcey

Good afternoon, thank you

Selling Stuff

Paul Darcey

@pauldarcey #ullconf

Making Money With Apps

Today I’m going to talk about how you can make money by selling stuff through your app. We all know the main ways to “monetise” your app:

Sell apps

Sell the app (for, say, $0.99)…

Advertising

…use advertising ($0.0x per thousand taps/clicks/views)…

In-app Purchases

…and in-app purchases (don’t we all love those!)

These are not mutually exclusive — you can mix & match them in any combination. But I’m not going to talk about them; we all know how they work. I’ve got one more to add to the mix; one you’re probably familiar with if you’ve done client work

You have banks, supermarkets, airlines, hotels, rental cars, and hundreds of other businesses that have apps in the store. These apps are not cheap to make. They have some things in common: free; no advertising, don’t use Apple’s in-app purchasing. So, how do they make money? Selling real-world goods/services (obviously)

You don’t have to be a bank or a supermarket or a hotel to do this; I’ve got an app that’ll be in the store later this year: Passport. It tracks which countries you visit and gives you virtual stamps, then allows you to purchase a *real-world* souvenir passport.

Have to roll our own

“But doesn’t Apple prevent you from selling real-world goods?” They forbid it through their in-app purchase API (for now—I believe they’ll open that up eventually, hopefully this year), but allow it if you roll your own payment mechanism.

Have to roll your own

This is not trivial to do. But people have been doing it for web sites for over a decade, so it’s a known/solved problem.

Cons• Have to roll your own payment mechanism

• Find suppliers

• Delivery

• Warehousing / Logistics

• Returns / Refunds / Damaged in transit

Normally in a talk like this, we’d start with the Pros and then move on to the Cons, but we’ve already started with the Cons, so let’s continue: • Finding suppliers is not as easy as you might think • Delivery will be out biggest cost, not the production of the goods. You might find the same • Depending on what you’re selling, you might have warehousing/logistics costs • You will have to deal with customer complaints and requests for returns, refunds, and for goods damaged/lost in transit

Pros

• People are used to paying for real-world goods

• Sell variety of products

• It’s not easy for others to simply “clone” your idea

So, why go through all that pain? The main one is that people are used to paying for real-world goods. Nobody expects to purchase a hotel room from an iPad app and for it to cost $0.99! Having gone to the effort to put in a store, you can expand your range o include other goods, e.g. T-shirts, caps, etc. Finally, we all know it’s easy (and inevitable) to clone your app. But it’s not so easy to set up all the other parts, so you can expect that the cloners won’t target your app.

It’s not just me that’s doing this: Rovio games (Angry Birds mainly) have been downloaded more than 1.7 billion times. Within their games, their main sources of revenue are paid titles, virtual goods and advertising (i.e. all the traditional methods). But their sales of real-world goods accounted for 45% of Rovio’s total revenue! (Sources: http://www.joystiq.com/2013/04/03/rovio-revenue-in-2012-doubles-to-195-million-toys-contribute-4/ http://www.rovio.com/en/news/press-releases/284/rovio-entertainment-reports-2012-financial-results/2013 )

Thank you

Paul Darcey @pauldarcey pdarcey.com #ullconf

Selling real-world goods is not a silver bullet, nor a replacement for the other methods of monetising your app. But I think it’s worth considering as an extra possible source of revenue. If you want to talk about this some more, or have any questions, hit me up during the conference, or on Twitter, or my blog. Thank you